Guest column: Comprehensive tax reform urgently needed in Tennessee and across United States

Few can dispute that the United States tax system is broken. The complexities, the loopholes, the uncertainties, the uncompetitive rates — they all ensure our tax code is neither sustainable nor fair. No wonder our economy is still struggling to fully recover from the Great Recession.

That’s the bad news. The good news is that Republicans and Democrats agree that we have a problem that needs to be fixed. Soon. Leaders from both parties, including President Barack Obama and House Speaker John Boehner, R-Ohio, know that comprehensive tax reform is key to economic growth, job creation and innovation.

And there’s more good news: Sen. Max Baucus, D-Mont., and Rep. Dave Camp, R-Mich., the two top tax-writers in Congress, are fully aware of the urgent need for reform. Indeed, they will visit Memphis on Monday to tour businesses and discuss ways to fix the tax system. Memphis, like countless other communities through the United States, cannot afford to continue to see jobs shipped overseas to countries that benefit from simpler tax codes.

The “Max & Dave Simpler Taxes for America Tour” will visit the FedEx World Hub as well as a family farm in Oakland, Tenn.

Baucus and Camp have also visited Minneapolis, Philadelphia, Pa., and the San Francisco area during the August congressional recess as they seek to learn more about how workers and businesses navigate the tax code. With a 74,000-page tax code and the highest corporate tax in the industrialized world, it’s not easy.

Throughout their tour, Baucus and Camp — who are chairmen, respectively, of the Senate Finance Committee and the House Ways and Means Committee — have been hearing that business owners are feeling choked by a tax code that is suppressing economic and job growth, and that an overbearing tax code slows innovation and discourages entrepreneurship. In fact, a study by the law firm O’Melveny and Myers found that firms facing a burdensome corporate tax rate such as the one in the United States are at a competitive disadvantage against their international counterparts and could thus “fall behind in innovation and productive capacity.”

The United States, still coming back from a recession, cannot afford to fall behind like that.

Our leaders realize this. They know our corporate tax rate is much too high if we are to compete globally. That’s why we need comprehensive tax reform that simplifies the system and makes it more fair, eliminates the puzzle of endless exemptions and tax breaks, and lowers the rate to an internationally competitive level.

The essence of reform would use the revenue gained from simplifying the code to pay for a lower rate.

The U.S. corporate tax rate is the highest in the world, at 35 percent, a full 10 percentage points higher than the average of our international competitors. And the problem is getting worse as other nations see opportunity and continue to cut their corporate rates in an effort to lure jobs and investment.

If the United States had an internationally competitive corporate tax rate of 25 percent, the average of the OECD nations, U.S. GDP would be $320 billion higher and Tennessee’s GDP would be $6 billion greater.

It’s pretty simple. If you lower the tax rate, you broaden the tax base, and American workers and companies benefit. It has worked before, most recently in the historic bipartisan 1986 tax reform package, which assured continued growth for another two decades. And it will work again.

America has long been the best country in which to start and build a business. We have always adapted and innovated — from the barges traveling down the Mississippi River to the up-to-the-instant shipping of FedEx — making the United States renowned for giving rise to new technologies, inventions, even whole industries. But business’ innovations, and the jobs they produce, are threatened by high corporate tax rates.

It’s time for action. The unemployment rate is too high and U.S. companies continue to flee in search of countries with lower taxes. As the Max & Dave Simpler Taxes for America tour continues, all Americans should make their voices heard by submitting their thoughts on comprehensive tax reform at taxreform.gov or tweeting Baucus and Camp at @SimplerTaxes.

Elaine Kamarck and James P. Pinkerton are co-chairs of the RATE Coalition (ratecoalition.com), a tax-reform advocacy organization.